The Tax Observatory of the EU does he say he has the solution or is this a delusion?
How to make them richer people of the world to pay more taxes; What a few years ago might have seemed like a science fiction story, now has a definite proposition. In fact, it is a report commissioned by the Brazilian presidency of the G-20 to the French economist Gabriel Zucmandirector of the European Union Tax Observatory and student of Thomas Piketty.
Zucman is also one of the world’s leading experts on international tax evasion and avoidance. According to the report, if the world’s richest people—the nearly 3,000 people whose assets exceed $1 billion (about €935 million at current exchange rates)—paid at least 2% of their wealth each year, governments would collect 200 to 250 billion dollars annually globally!
And it is true that this debate needs to be “opened up”, and there are many reasons for this: more wealth is concentrated in fewer hands (billionaires’ contribution to public coffers is decreasing), the tools available to track money flows and share information between countries are very mature and finally, in 2021 an international consensus was already reached between more than 140 countries so that the largest multinational companies in the world pay a minimum corporate tax of 15%. In fact, the economist’s proposal partially mimics the structure of this agreement.
The basic proposal provides that people with a total wealth of more than $1 billion – including property, real estate, stocks, ownership interests in companies, etc. – they will pay a minimum tax amount equal to 2% of their wealth annually, if they do not already pay this amount in personal income tax. “It will not be a global tax, but a framework, a common standard to reduce the regression seen at the top of the income distribution”, Zucman himself clarified. On the other hand, countries could implement mechanisms “tax collector of last resort”.
The economist points out that this 2% contribution should be calculated on wealth and not on income, since it can hardly be hidden.
In the baseline scenario, the additional collection for governments will be between $200 billion and $250 billion, or an average of over $80 million per person. If the framework were extended to individuals with a net worth of more than $100 million, it would collect an additional $100 billion to $140 billion annually—if the rate were 3%, the collection would be between $550 billion and $690 billion, of which 55% it would come from billionaires.
The rich are growing…
The wealth of the rich has tripled in the last 25 years, as “EL PAIS” writes. If in 1985 they represented 3% of world GDP, now they amount to 14%. However, their contribution to public funds did not increase at the same rate. On the contrary, their contribution in terms of personal taxes is only 0.3% of their total wealth, as they have tools to avoid paying taxes, such as portfolio companies (holding companies) etc.
The United States, the so-called land of opportunities, is the cradle of the richest personalities on the planet, from Bill Gates to Elon Muskwho are some of the people who will be asked to increase their contribution to public funds.
The report, published by the EU Tax Observatory, a European-funded think tank, does not propose a global tax or a single tool to implement its proposal, but rather “a flexible model that respects national sovereignty”. It could take the form of an income tax amendment, including a broader definition of income or a presumptive income tax. That is, governments could choose which measures to take. “This minimum tax should not be seen as a wealth tax, but as a tool to strengthen the income tax”the report states. “Only billionaires who currently pay less than 2% of their wealth in tax should pay more.”
The report, however, acknowledges that there is still a long way to go to achieve this. On the one hand, there are still gaps in the international exchange of information, which make it difficult to identify the real owners of assets. These deficiencies could be mitigated by country-by-country exposures—since most of the wealth of ultra-high earners comes from their holdings in large corporations. For example, to identify people who own more than 1% of the shares.
On the other hand, there is the perennial problem of a globalized world in which it is extremely easy to change one’s place of residence to a country with a lower tax burden or, in this case, to a country that does not participate in the design of a global tax for the wealthiest. . Everything is possible if there is a will. No need for the rich to “cry”. Simply, their contribution can and should be increased.
Source: Skai
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